If you have considered raising tuition by a significant amount (>5%) the reaction from parents has likely been varied. Typically, few families will balk at a slight tuition increase, but could react negatively to a heftier increase if your reasoning is not well thought out, prepared for well in advance of an announcement, and announced to the school community at least one to two months ahead of re-enrollment time.
In order to raise tuition without backlash the value of the education and program offerings has to be present. In other words, parents need to believe that the educational experience their children are receiving is worth what they’re paying or more. Likewise, employees must whole-heartedly believe in the value of what they provide or they will undermine the success of the tuition increase. Certainly, this must convincingly also be heralded by administration and board.
If it is determined that the value is not present in order to make a substantial tuition increase, the school leadership and employees must understand what is lacking. If it is something that has happened at the school (suicide, favored teacher fired, major poor decision, etc), or something that needs to be fixed (such as too many poor teachers, or poor leadership), then tuition could still be increased a couple percent as long as there is an aggressive plan put into place to fix the things that are detracting from their perceived value.
If the value is not present, and it is just an inability to provide quality because of a lack of resources, the school must then work to educate parents and employees on how an increased tuition will be used to provide families with more of, or a better quality of, what they want for their children. The school must show parents how an increase in tuition will enable the school to better accomplish its mission.
If a school needs significant increases to stabilize or survive financially, they may need to do it over a 3-5 year period. For this to be successful, the decision, and plan to see this accomplished, must be laid out clearly and convincingly prior to announcing it. Focus groups, etc., need to convince parents that this is necessary, and that it will make them happier and make their students more successful. One way to soften the blow is to offer parents a discount if they re-enroll for the next year early. If they re-enroll prior to the deadline they can have last year’s tuition rate. This way currently enrolled parents can be a year behind everyone else for their tuition rates. This is one of the most successful incentives we have seen school's implement with an increased tuition strategy.
Every time a school increases tuition they invariably increase the percentage of families who need tuition aid.
HOW INCREASED TUITION IMPACTS TUITION AID
Tuition increases without adequate tuition aid is a major mistake. What we have seen over and over again as we survey schools multiple times, is that the demographic of their families changes as they raise tuition without adequate aid. The first casualty is the middle class ($50-100K). This is because schools will still have enough aid for lower income families but not enough for middle income families. Middle income families are most typically replaced with families making over $150K. In one sense, this is nice because you can charge more for tuition. However, It is tragic in that it is the lower and middle income families that create the culture of the school. Higher income families don’t get nearly as involved.
If a school already gives out adequate tuition assistance (a best-guess without any survey information or demographics is 12-15% of their tuition income), then whenever they raise tuition they need to raise tuition assistance by twice as much. In other words, if they raise tuition 10% they need to increase tuition assistance by 20%. So, if they budget 12% of their income for aid, and they increase tuition by 10%, they need to increase their aid by 20% (to 14.4%). Every time a school increases tuition they invariably increase the percentage of families who need tuition aid.
When tuition exceeds 10% of a family’s net monthly income it becomes difficult for them to pay. (7% if they’re in an area with very high housing costs – Crown says 5% is what a family should budget for private education – that’ll never happen unless they make >$150,000). The way we calculate how much the school should have available for tuition aid is to see how many families fall in that >10% “difficulty paying” category. If tuition is $500/month, then families taking home less than $5,000 per month will probably need help. How much will the typical struggling family need? We recommend aiming for 40% of a tuition bill (for the average family in need) to be paid by tuition aid. So, if a school has 30% of their families making <$75,000/year, then they should budget 30% of families X 40% of tuition paid, or 12% of their tuition income for tuition aid.
CAPPING TUITION AID
We recommend capping tuition aid at 50%. What if a family can’t make it on 50%? Then the school needs to decide if they’re going to make an exception . If they do, the exception needs to be discussed in a committee, or at least by >1 person to protect the person making the decision. Notations should be made in their file. The exception needs to clearly be for a specified period of time. Either one semester or one school year. If it is because a family has too much debt, only make an exception with the requirement that the family see a financial counselor if they want to get aid the next year, too. Every exception needs to be revisited every year, it’s never automatic.
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